Highlights—December 3, 2011

Retirement Heist:

Throughout the IBM Pension heist, Ellen E. Schultz, a Pulitzer Prize winning investigative reporter with the Wall Street Journal,
exposed IBM's and other companies shenanigans that have cost retirees millions and millions of dollars, while enriching corporate executives.

Ms. Schultz has just published a book that every IBMer should read:
Retirement Heist: How Companies Plunder and Profit From the Nest Eggs of American Workers.
Many IBMers are aware of the "cash balance heist" of 1999. However, IBM has been stealing money from the pension plan dating back to 1991, well before the Gerstner era.

An Amazon.com customer review:

Great book, November 2, 2011, By Aclimatehawk. Can't say I enjoyed this book due to it subject matter. That said Ms Shultz style made this book easy to read and covered the topic very well. This is a book ALL Americans should read, to learn one more way the rich and powerful have rigged the game in their favor. In this case it is the very people that made the products and services that made the companies in the first place are the ones being exploited. Mirroring the main theme of the OWS protests, the game is rigged in the favor of those at the top.

MSN Money: CEOs who became job killers. These executives took corporate downsizing to new heights. By Joe Mont. Excerpts: Chief executives are the point men when companies fire employees. Some approach job slashing as a regrettable but necessary task; others seem to relish the role. And since Wall Street tends to reward all manner of cost cuts, some CEOs have boosted their bonuses with each pink slip. The following CEOs are known, at least in part, for their roles as job killers. ...

Former IBM chief Louis Gerstner oversaw one of the largest job purges ever at a U.S. corporation; more than 60,000 employees were eliminated in 1993, the year he took over as chief executive at a floundering Big Blue. The job cuts were part of a revamping that has been credited with keeping IBM in business. Gerstner changed the company's culture, as well as its focus, shifting from computer hardware to information-technology services. He also embraced the Internet as a business phenomenon.

Herald Sun (Australia): Workers at Apple and IBM supply plant go on strike in China - rights group. Excerpts: About 1,000 workers at a plant in southern China that makes components for Apple and IBM went on strike this week, a rights group said, the latest in a string of labour disputes in the country. Hundreds of police officers, some in riot gear, deployed after staff at the factory in the manufacturing hub of Shenzhen walked out Tuesday and blocked a highway to protest long working hours, China Labour Watch said.

Staff at the plant commonly worked 100 to 120 hours of overtime a month and said they also suffered a high rate of workplace injuries, mass layoffs of older workers and frequent verbal abuse by managers, the US-based group said.

The J&S option is similar to a form of life insurance. You will get the largest
monthly pension check if you decline the J&S coverage and take the single life
option. Reducing J&S below 50% will require the consent of your spouse.

If you think that your spouse will need your pension income after your death, then the J&S probably makes sense.
If your spouse has other sources of income, such as their own pension, savings or social security, then maybe the J&S option isn't necessary.

You may be able to do better than the cost of the J&S option by taking out a separate life insurance policy.
Term life is one option, but perhaps not a good one since most policies last for a fixed time period, say 10 years,
and you may not be able to renew it at the end of the initial term if you have health issues.
If that happens, your spouse could end up without income that you had been planning on.

A more comparable choice to J&S would be a whole life policy, although this will be more expensive.

If you have any health issues today, you may not be able to buy a life insurance
policy at a reasonable price leaving the J&S option as your best or only choice.

If you do decide to go with a separate life insurance policy, make sure you have the actual policy in
hand from the insurance company BEFORE you sign the IBM retirement paperwork.
It's not uncommon for an insurance company to give you an initial, non-binding approval and then turn you down once
they investigate your health history further. Once you sign the IBM paperwork and mail it in, there is no opportunity to change it.
So don't leave shopping for life insurance until the last minute.

The cost of the J&S option will vary depending on the difference between your age and the age of your spouse and your expected lifetimes.
Many people feel the restore option is worthwhile as it costs very little extra on top of the J&S coverage.

The social security leveling option has a whole bunch of different considerations.
If you choose this, essentially IBM will be loaning you money to boost your monthly check to make it look like you are collecting social security now.
You pay for the loan through a reduction in your pension benefit.
Hidden in that reduction is interest you have to "pay" for that loan.
Typically, the interest rate IBM charges has not been cheap.

My advice would be to skip the social security leveling option if you can afford to get by without that extra income.
If you are just a year or two away from social security eligibility, that might be easier to do than if you are 8 or 10 years away.

Yahoo! IBM Pension and Retirement Issues message board: "Re: review of pension options - Single, J&S, J&S + Restore, SS Level income" by "hankharty". Full excerpt: Madinpok, very good advice. Because you will probably never get a COLA on your IBM pension, declining SS leveling will give you what could be considered a COLA once your SS begins. If you need the SS leveling dollars now to live on, it might be a different story. Everybody's situation is different.

Yahoo! IBM Pension and Retirement Issues message board: "Re: review of pension options - Single, J&S, J&S + Restore, SS Level income" by "Johnny 5". Full excerpt: As no one ever showed me the amount of money gained until SS and the amount of money after SS started, I made a serious mistake by taking income leveling. I feel that is another way IBM has to take benefits away from you. The amount of my post SS retirement is 1/5 of my pre SS retirement. My advice, unless you know you are going to leave this world before SS kicks in, DON'T DO IT.

Yahoo! IBM Pension and Retirement Issues message board: "Re: review of pension options - Single, J&S, J&S + Restore, SS Level income" by "thirtyyearibmer". Full excerpt: Some good advice in here. As a data point, when I was working on my retirement I had an outside financial adviser (paid with my dollars and not commissioned to sell insurance) look at this scenario: buying term or whole life insurance on my life + the IBM single life option in place of the J&S at 100% (the check is the check "we" will get for our joint lives - it will never change based on one spouse's death). He basically said that the IBM rate was very competitive for J&S. He also pointed out that you would be taking some risk in the "insurance company" that you took the policy out from.

I don't have the actual numbers. I will also say that if you don't pay for the
advice, but seek advice from someone that makes a living off the insurance
commissions they sell, you could easily get a different answer. So be careful.

As far as the Social Security leveling, in our case he said to not even consider
it. I had already arrived at that conclusion myself, but it was good to see it
validated. There are reasons as pointed out below where it might make sense.
Situations vary.

Pension benefits are taxed as ordinary income (federal and most states).

As you can probably see, a comparison can be quite complicated and depends on individual circumstances.

If you do decide to replace J&S with life insurance, be sure to follow
Madinpok's advice:

"If you do decide to go with a separate life insurance policy, make sure you
have the actual policy in hand from the insurance company BEFORE you sign the
IBM retirement paperwork."

Yahoo! IBM Pension and Retirement Issues message board: "Re: review of pension options - Single, J&S, J&S + Restore, SS Level income" by "willbefree25". Full excerpt: I don't know if this is on IBM (wouldn't surprise me, given their track record of mendacity and duplicity) or SS, but I do remember very distinctly someone telling me, years and years and years ago, NOT TO TAKE INCOME LEVELING. This person DID NOT KNOW that their pension would go down to account for the extra money originally given them. So sad.

If IBM poses this as something good (wouldn't surprise me, given their track record of mendacity and duplicity), then yes it is IBM's fault.

If it is the failure of the person about to receive SS to do their homework,
then it is on them.

At any rate, the moral of this story is NOT TO TAKE INCOME LEVELING.

Now, if someone had warned me years and years and years ago about IBM reneging
on unwritten promises, things today would have been so very different.

And what I really don't understand is: My wife turns 65 in August 2012. I will be 64. The cost for IBM EPO-MVP goes from $1233/mo for Self +1 down to $1062/mo for Self +1 Medicare Dependent. If Medicare will be her Primary, why is this so high? It is only $298 for just myself. What am I missing? I thought if you were on the old plan, IBM contributed to you and your wife's Medicare Premiums or was that discontinued after a certain date like the Life Planning Account for Retirees who retired after 12/31/2003. I retired in 02/2004.

Although the state restricted the premium increase that MVP can charge to their customers, that does not apply to employees and retirees under the IBM plans. IBM is self-insured and pays all the bills, MVP just administers the plan for IBM and provides the network of physicians and hospitals. States do not regulate premiums of employer-provided insurance plans, such as IBM's.

The other factor is that IBM contributes a maximum of $7000 per year (on
average) to the medical coverage for retirees who are on the old medical plan.
You have to pay any increase above that amount.

There is no guarantee that IBM actually contributes the full $7000. IBM just
promises it will never pay more than that when averaged across all old-plan
retirees and nothing guarantees that they will actually pay that much.

The FHA (Future Health Account) rates for this plan (where the retiree pays the full cost, with no
subsidy from IBM) give us an idea of the "real" cost without an IBM subsidy, and
the premiums actually decreased slightly for 2012.

So it appears that IBM decided to be less generous and is kicking in less for
next year, at least for the EPO-MVP plan.

In 2011, the apparent IBM subsidy for this plan was $5206 for self+1 coverage.
In 2012, it looks like it is only $3059.

Yahoo! IBM Retiree Information Exchange message board: "Re: Can someone please explain IBM's pricing" by "redrock_5432". Full excerpt: I agree with all madinpok wrote plus: The apparent subsidy is not the same for self and self+1. With some exceptions most of the subsidy is assigned to 'self'.

Also, and I am speculating, each plan has its own set of retirees with conditions that make the selected plan most attractive. This can/will lead to adverse selection and premiums to match.

Yahoo! IBM Retiree Information Exchange message board: "Re: Can someone please explain IBM's pricing" by "madinpok". Full excerpt: Here is some additional data on the apparent subsidies for the old retiree medical plans. To come up with these subsidy amounts, I subtracted the annual premiums for those in the old medical plan from what those in the FHA plan pay.

Overall, the subsidies decreased compared to 2011. In most cases, the subsidies for Self+1 are significantly lower than those for Self-only. (Sorry if the formatting is poor... but that's Yahoo)

Plan

Subsidy for Self

Subsidy for Self+1

IBM EPO - MVP

$5,279.40

$3,058.80

IBM Hi Ded PPO w/ HSA - MVP

$4,772.76

$2,897.40

High Ded PPO - MVP

$6,423.48

$7,387.08

Med Ded PPO - MVP

$4,578.48

$2,652.72

Low Ded PPO - MVP

$4,749.24

$2,310.36

Subsidy change from 2011:

Plan

Change from 2011(Self)

Change from 2011(Self+1)

IBM EPO - MVP

-$533.64

-$2,147.28

IBM Hi Ded PPO w/ HSA - MVP

-$400.80

-$1,761.60

High Ded PPO - MVP

-$148.20

-$824.28

Med Ded PPO - MVP

-$472.92

-$1,869.96

Low Ded PPO - MVP

-$738.24

-$2,508.48

So what happened to the promise that IBM would contribute $7000
per year to the old retiree medical plan?

Well, that's hard to tell. IBM actually promised to cap the
contribution at an AVERAGE of $7000 per retiree. From the numbers here,
it sure doesn't look like they are contributing anywhere near that much,
unless the vast majority of old-plan retiree are enrolled in the High
Deductible PPO (without HSA). In that case, IBM might actually be
living up to its promise. But we have no way to know whether that is
the case.

Now has anyone been able to figure out why our monthly premium drops from $1233 to $1062 for the IBM EPO-MVP when my wife goes on Medicare? I'm sure a MVP Medicare Advantage Plan is less than $764/mo. Wouldn't I be better off taking Self for $298 and buy a Medicare Advantage Plan elsewhere for my wife? I'm thinking $1062 - $298 = $764 per month. She still has to pay for Part B out of her SS check so where do they come up with that figure for her? Thanks, John

Compensation - Base salary is downright pathetic. I counter-offered out of college and it was turned down, but decided to work for them anyway. Annual raises only go to employees with PBC 1 and 2+ ratings (roughly 2% a year). Bonuses are offered to only PBC 1 (top performers) and are about 4-5% of base salary. They COE will offer "retention bonuses" to their top performing employees ($10K in two installments of $5K over two years. Each year you are committed to stay with the company for one year. If you leave you must pay the bonus back). All of these "incentives" are a slap in the face because your base salary never really grows.

Growth Opportunity - From day 1 you are sold that the opportunities are endless within IBM, but in reality they are not unless you want to settle for jobs that never give you face to face exposure with middle management or senior leaders. They constantly try to sell you that the prize is going out to Somers, NY to work with the finance teams out there, but they'll give you $60k to move out there...to NY, which is just laughable. Once you get out there you will work 60-70 hours a week, and it might take you 5 years to get to a level of income where you're just breaking even due to the market prices out there.

Environment - Rochester absolutely sucks and becomes depressing after the first year. If you like small towns you might object to that statement. Your first year might seem cool working with other twenty-somethings out of college, but after a few years you'll realize that an environment where people wear shorts to work and play foosball all day is not a place where you can further your career. Also, you will share an office with another co-worker that will be from 1970 and include a phone that is also from 1970. You'll get a work laptop, but you have to buy your own monitor if you want something bigger than a 13'' screen. (No joke).

Cost Cutting - IBM manages their expenses very closely which means you do not get the leisure of having them pay for work outings, business cards, or other sensible acts of corporate kindness when you're working on Saturdays and Sundays. After I left the company, I was told that the Rochester COE would no longer be getting their offices cleaned or their trash taken out (employees have to take their own trash out!). So it looks like not only are you a financial analyst now, but you're a part-time janitor as well.

The above might make it seem like I hate IBM, but I really do not. It's a great company...for shareholders. If you can commit three years of your life here you will become very marketable and make a decent sum of money if you opt to work elsewhere.

Advice to Senior Management: I agree that it's all about pleasing the shareholders, but if you do not compensate your employees better you will lose all the talent your company needs to continue driving that lovely EPS roadmap.

IBM Anonymous: (Current Employee) “best solutions, worst employer.” Pros: Education & development opportunities are great. Cons: ibm cost saving is destroying any company culture & will drive away the best people. Advice to Senior Management: invest in building a team spirit

IBM Anonymous: (Current Employee) “Not bad, but hard to feel strongly about.” Pros: Great brand. Great American company. Safe. Decent pay (but not great pay also not well-adjusted for high-cost locales.) Some very bright and interesting coworkers (mean employee quality just slightly above average; probably not a corporate objective to do too much better than that as they cannot compensate at a level that the truly great employees might demand.) Cons: Not as safe as it used to be, plenty of US layoffs and jobs moving overseas. Bureaucratic. Run by bean-counters. Cult of the salesman. Good, not great, No work/life balance in consulting, though I'm told it's good elsewhere in IBM. What have you done for me lately? No real bonus. Draconian expense policies. Resists change. Large size = no individual relevance to unit or corporate success. Advice to Senior Management: Forget about next quarter, think about the next 100 years. Quit trying to squeeze blood from a stone. Your clients and your employees are more important than your stock price.

IBM Software Sales Manager: (Current Employee) “Good Place to Work.” Pros: Education and career diversity is very good. Career growth can be achieved but only for the very top performers. It is nice to be able to move to other roles and product areas. Very diverse. Cons: Decision by committee on everything. Way too much micro management of Sales. Sales spends 30 - 40% of their time actually selling. 60 - 70% in administrative overhead. Advice to Senior Management: Change Sales to allow sellers to actually sell, not be on forecast calls and doing emergency projects. Too many "chiefs"...not enough "Indians".

IBM Anonymous in San Jose, CA: (Current Employee) “Good for resume; bad for blood pressure.” Pros: - Looks fantastic on a resume. - Pay is sufficient for survival. - Benefits outside of salary are decent. I appreciate the health, vision, and dental plans and the fact that they match up to a certain percentage that you pay into your own 401(k).

Cons:

Overtime is expected. Constantly. We are told, "It all evens out eventually," but no amount of comp time makes up for the amount of hours I work. I'm pretty sure now that they don't care if we burn out within a few years; there's always someone cheaper who will take our place, in their minds. I haven't worked <60-hour week for the past two years...and I've only been here for three.

I'm definitely not getting paid enough to work the hours that I do.

Management at the highest levels are absolutely not aware of the demands being placed on those actually doing the work that they require. Because someone at the top said, "jump," everybody asks, "How high?" for fear of making the wrong person angry.

On the same note, requirements for projects grow, while company resources go down. There simply aren't enough people to complete the work that we have piled upon us in any sort of satisfactory way. We were told earlier this year that we should figure out ways to "do less with less"...so why aren't we actually doing less?

There is too much of a focus on quantity and not quality. Why aren't we selling as much? Because the work we do is shoddy at best. Because of the insane requirements heaped upon us at the beginning of a release, designs aren't thought through, and subpar products are released as a result.

Those that speak loudest get the most rewards, even if their ideas go nowhere. I've seen people advance to the highest pay and responsibility band despite having little to nothing to show for it. Meanwhile, the employees that actually provide value are left behind. Eventually, they leave, while the loudest speakers remain and continue to drive the company further into the ground.

I feel as though I was sold a lie when I signed on to the company. I was told that I could do anything I want; that I can create a career here; that the sky is the only limit. However, despite expressing a desire to seek other avenues or more creative ways of doing my job, I am pigeonholed into the same position repeatedly, with more responsibility for my current position being piled on. There is no time to develop other skills, and what used to be a skill quickly becomes stagnant. I absolutely do not feel free to pursue other paths, because I am constantly told, "You are needed more here. If you don't like it, you can leave."

Too much of a focus on being physically present. If I want to work from home, I should have that option, particularly when I have demonstrated that I can be trusted to actually produce good results while still working from home. The "back to the lab" initiative makes no sense—to be told that we must be present to be remembered makes absolutely no sense when most of the development teams are scattered all over the world. Most of my team isn't local, but they still know me and trust me. But apparently a few rotten apples that have abused the system while producing terrible work have ruined it for everyone. Because they worked from home too often, everyone else has to suffer.

On the same note, zero work-life balance. They've stopped calling it that now—it's now "work-life integration." To me, that just says, "We expect you to work more than we want you to have a life outside of the company."

Advice to Senior Management: The answer to our problems is not to shove more and more features into our product. Do you remember when we used to be associated with quality? Not a week goes by that I don't hear from an important, dissatisfied customer that is on the verge of dumping us for a competitor. Stop focusing on quantity. Focus on quality. Quality is what sells. Quality is what keeps people coming back. Quality brings us money. So why aren't you focused on quality anymore?

IBM Senior Sales Software Engineer: (Current Employee) “Excellent school but do not recognize their key human resources anymore as previously.” Pros: Excellent product lines and engineering skills, Cons: Focus too much on stockholders and executive bonus based on stock value and profit versus customer's requirements and satisfaction. Not enough people in the field. Too many managers tracking numbers instead of helping their employees. Advice to Senior Management: Focus less on IBM Stockholders and change current IBM Executive compensation plan to focus more on software development and customer satisfaction instead of IBM Stock value and profit. Hire more people to work directly with customers instead of hiring team leaders or manager to track business numbers instead of helping their employees.

There is an arresting moment in Walter Isaacson’s biography of Steve Jobs in which Jobs speaks at length about his philosophy of business. He’s at the end of his life and is summing things up. His mission, he says, was plain: to “build an enduring company where people were motivated to make great products.” Then he turned to the rise and fall of various businesses. He has a theory about “why decline happens” at great companies: “The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesman, because they’re the ones who can move the needle on revenues.” So salesmen are put in charge, and product engineers and designers feel demoted: Their efforts are no longer at the white-hot center of the company’s daily life. They “turn off.” IBM and Xerox, Jobs said, faltered in precisely this way. The salesmen who led the companies were smart and eloquent, but “they didn’t know anything about the product.” In the end this can doom a great company, because what consumers want is good products.

This isn’t quite the whole story. It’s not just the salesmen. It’s also the accountants and the money men who search the firm high and low to find new and ingenious ways to cut costs or even eliminate paying taxes. The activities of these people further dispirit the creators, the product engineers and designers, and also crimp the firm’s ability to add value to its customers. But because the accountants appear to be adding to the firm’s short-term profitability, as a class they are also celebrated and well-rewarded, even as their activities systematically kill the firm’s future.

In this mode, the firm is basically playing defense. Because it’s easier to milk the cash cow than to add new value, the firm not only stops playing offense: it even forgets how to play offense. The firm starts to die.

If the firm is in a quasi-monopoly position, this mode of running the company can sometimes keep on making money for extended periods of time. But basically, the firm is dying, as it continues to dispirit those doing the work and to frustrate its customers.

On your comment “I look forward to the day that more business leaders put that theory to work”. I’d put it that we need a new breed of leaders who have a sense of duty to their customers, employees, shareholders as opposed to themselves. There is a huge cultural problem of selfserved-ness among c-level executive circles. I’ve seen many cases where all they care about is bullying their own selves into very powerful and secure positions in an organization, and paying about an order of magnitude less attention to anything else – be it creativity or efficiency or bottom line or whatever you might want to call it – in the companies they run.

I remember this as being utterly rampant at the consulting firm I used to work for. When Perot Systems was privately held, we focused on service delivery and delighting the customer. We went above and beyond – and our customers loved us. We grew. We went public. Our focus then became delighting Wall Street and the accountants. Clients suffered. We suffered. I see the pattern repeat itself again and again. I now choose to freelance and work with the smaller, privately held companies. We make the customer happy. They keep wanting us to do more and we find that exciting. Unfortunately I have yet to work for a company that after it went public, Radical Management was practiced. The workforce became beholden to the quarterly numbers, sales people took over – and the real talent leaves in droves. Whenever I see a tech buyout, I notice more often than not it was just a client list that was purchased. The real talent (usually) leaves. Perhaps I am jaded – but it’s what I see happen time and time again.

The reference to IBM by Jobs is just rubbish. The company is 100 years old. It is currently (by market capitalisation) number 2 – after Apple. Let’s see how well Apple maintains that position – apres Jobs. Just because the guy is dead doesn’t suddenly make him all knowing. (Or a nice guy for that matter.)

Blimey Steve Radical Management it is not – Listen to the late great W. Edwards Deming, probably the greatest American-born expert on Quality: ” When people and organizations focus primarily on quality, quality tends to increase and costs fall over time. However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time “ . Steve J had that on his wall for all to see and should be on the Forbes masthead!

Almost all the comments have the same theme here (management is the problem, not innovation or engineering). But since management has a stranglehold on both identifying and fixing the problem it will not get fixed and America’s economy will continue to decline. What will happen is; 1) anyone who complains or identifies the real problem will be laid off. 2) managers will continue voting themselves pay raises and golden parachute packages regardless of their poor performance.

In relation to your column here, you bring forth good points and have to say I agree. I have now worked for two Fortune 500 companies and it is so short sighted in regards to creating long-term value that we live in a paranoid state of measuring the “numbers” on a biweekly basis. While doing this, the opportunity cost is the loss of delivering new value and thought leadership to our clients. I have also worked in the “Big 4″ and saw this opportunity cost in motion as it became about hitting numbers – e.g., billable hours and pre-set profit margins – to the detriment of clients.

Plan Sponsor: Americans Don’t Enjoy Vacations as Do Global Peers. Excerpts: The average employed European earns 25-30 vacation days in a given year, and, with some exceptions, tends to use them all. Brazilians treat vacation as the Europeans do – as a vital part of being employed, rather than a luxury. The study showed that Brazilian workers receive 30 vacation days and enjoy every one of them.

However, Americans treat vacation as a luxury rather than a fact of life. Americans receive roughly half the Europeans' allotment of vacation time. In 2011, employed Americans earned 14 vacation days and took 12, a decrease from 2010. The median number of vacation days U.S. workers earned in 2010 was 15 days; the number taken was 12. In comparison, the French earned 30 vacation days, and took all 30 in 2011. In 2010, the average French worker used all but one of their vacation days.

Washington Post opinion: The GOP’s war on labor unions. By Harold Meyerson. Excerpts: The Republican war on unions continues apace. On a near-party-line vote Wednesday, the House passed a bill crafted to thwart a National Labor Relations Board decision, made earlier Wednesday, that would entitle workers to a timely vote on unionization once they’ve petitioned for it. By ruling that employers’ legal challenges can be entertained only after a vote, the board effectively denied employers the ability to hold up a vote for weeks, months or even years. Elections delayed, the NLRB essentially said, are elections denied.

The House legislation, by contrast, stipulated that such legal challenges can go forward before the vote. The bill will almost surely go nowhere in the Democratic-controlled Senate, but then, it’s just one foray in the Republicans’ battle to extirpate worker-controlled organizations in America. ...

Some might reasonably wonder why the GOP war persists when union power has already been so greatly reduced. In the mid-20th century, 40 percent of private-sector workers belonged to unions; today, just 7 percent do. But the Republican struggle continues for two reasons. When it comes to elections, unions are still the most potent mobilizers of the Democratic vote — getting minorities to the polls and persuading members of the white working class to vote Democratic. Indeed, Republican gains among working-class whites (whom they carried by an unprecedented 63 percent to 33 percent in 2010) are, above all, the result of the deunionization of that class. An analysis of exit polling over the past 30 years shows that unionized white working-class men vote Democratic at a rate 20 percent higher than their non-union counterparts. For political reasons, Republicans are determined to de-unionize workers even more.

There’s another reason, too. The Commerce Department’s Bureau of Economic Analysis reports that in the third quarter, wages as a share of gross domestic product were the lowest they’ve been since 1929, and compensation (that includes health insurance) as a share of GDP was at its lowest point since 1955. Corporate profits as a share of GDP, by contrast, are the highest they’ve been since 1929. The destruction of private-sector unions has redistributed income to the rich, which is the Republican Party’s raison d’etre. Which is why the Republican war on unions — which is also the Republican war on the 99 percent — rolls on.

New on the Alliance@IBM Site

Comment 11/18/11: Contractors are being forced to take 3 weeks off per year. Something called a furlough. Overheard it in a SARM meeting & later again by a Toronto ibm tech. That represents 4 months of savings gone for most. -Shadowschild-

Comment 11/19/11: Shadowschild: With regard to contractors, yes I have personally witnessed that treatment in my area - both furloughs and elimination of overtime. Contractors are only allowed to work OT if they take an equal number of hours off the following week (without pay of course). We are already understaffed in my area and the obvious implication is that salaried IBMers should just pick up the slack. -Whhheeeeeeeeeee-

Comment 11/22/11: I know an area where hourly employees are told to record this weeks overtime hours on a future time card. Or work the time now and take the time off another week while recording you worked that time. Can you spell 'TAX EVASION?' -Sammy the snot-

Comment 11/23/11: To -Sammy the snot- If the contractors are working on a federal account or project where time is contractually required to be recorded (reported). That situation should be reported to the federal agency's inspector general. -Anon-

Comment 11/24/11: To Anon- Since contractors are not IBM employees, then even if IBM gets caught chances are the contracting company fires the contractor for the time and labor reporting violation done on IBM's premise. IBM has this all figured out. They can't lose in any way. And most likely the federal agency's inspector general owns IBM stock and thus is in IBM's pocket to begin with. -Anon2-

Comment 11/25/11: While I was still a contractor at IBM, my manager tried to get me to do that shady practice of working time one week but reporting it another. I declined to play that game. Ultimately the OT wasn't necessary that week. Also, IBM (and not only IBM) regularly requires workers to estimate time in advance that will be used for billing purposes. Is there any circumstance in which this is illegal? It bothered me every time I had to do it, before closing periods, and it bothers me where I am now. -Former_CDI_Drone-

Comment 11/27/11: Reporting hours worked on the wrong time sheet or for the wrong week is falsifying company records. If your manager requests that you record information incorrectly, on another week's form or such, ask them if they are asking you to falsify company records. See if they are willing to tell you to do that. I would not put my butt on the line to help make their totals work out. -Oatmeal-

Comment 11/29/11: I think the Alliance is still drawing enough attention to keep awareness about the off-shoring of the USA that IBM is at least slowing down or doing less RAs. But even one employee losing a job to a resource action is too much! BTW, I am a subscriber and encourage others to join with me. -subscriber-

Comment 11/30/11: SSR's keep up the pressure! No to pay and band level cuts! Actions taken: Mass emails sent to IBM executives by IBM employees, ex-employees, and IBM worldwide unions. Black and Blue on Black Friday. SSR organizing committee being formed. New actions to be announced! -Alliance-

Washington Post: A grim diagnosis for our ailing health care system. By Robert J. Samuelson. Excerpts: Even had it succeeded, the supercommittee would have failed. Ultimately, the only way to control federal spending and deficits is to suppress the upward spiral of health costs. These are already the budget’s largest single expense (27 percent in 2010, compared with 20 percent for defense), and their continued rapid growth, combined with the scheduled introduction of Obamacare, will soon bring them to nearly one-third. The supercommittee didn’t have the time or staff to solve a problem as contentious and complex as health care.

It remains urgent. Americans know that expensive medical care is squeezing non-health government programs and, through higher employer insurance costs, take-home pay. But they console themselves that U.S. health care “is the best in the world.” Among experts, this view has long been debated, but a new study from the Organization for Economic Cooperation and Development (OECD) in Paris suggests that the debate is over: It’s not true.

As societies grow wealthier, people want — and can afford — more health care. Still, U.S. health spending (about $7,960 per person in 2009) is in a league of its own. It’s 50 percent higher than Norway’s ($5,352), the next costliest. U.S. spending is more than double Britain’s ($3,487), France’s ($3,978) and the OECD average ($3,233).

Despite this, Americans aren’t notably healthier than people in other advanced countries, the study reports. Life expectancy in the United States (78.2 years) lags behind Japan’s (83 years) and the OECD average (79.5 years). It roughly equals Chile’s and the Czech Republic’s, says Mark Pearson of the OECD. Americans don’t have much to show for their system’s enormous cost, even if the gaps in life expectancy partly reflect differences in lifestyle and diet. ...

Indeed, by some indicators, Americans get less medical care than do people in other advanced countries. The number of practicing U.S. doctors (2.4 per 1,000 population) is less than the OECD average (3.1 per 1,000), as is the number of annual doctor consultations (3.9 per capita in the United States versus 6.5 for the OECD average). ...

What propels U.S. health spending upward? The OECD’s answer comes in two parts: steep prices and abundant provision of some expensive services. In 2007, an appendectomy cost $7,962 in the United States, $5,004 in Canada and $2,943 in Germany. A coronary angioplasty cost $14,378 in the United States, compared with $9,296 in Sweden and $7,027 in France. A knee replacement was $14,946 in the United States, $12,424 in France and $9,910 in Canada. ...

This is a devastating portrait. At times, the U.S. health care system delivers the worst of both worlds: pay more, get less. Unfortunately, the message isn’t new. America’s fragmented and overspecialized health system maximizes returns to providers — doctors, hospitals, drug companies — but not to society. Fee-for-service reimbursement allows providers to reconcile their ethical duty (more care for patients) and economic self-interest (higher incomes). The more they do, the more they earn.

Associated Press, courtesy of the Charlotte Observer: Medicare drug coverage gap shrinking for many Americans. By Ricardo Alonso-Zaldivar. Excerpt: Medicare's prescription coverage gap is getting noticeably smaller and easier to manage this year for millions of older and disabled people with high drug costs. The "doughnut hole," an anxiety-inducing catch in an otherwise popular benefit, will shrink about 40 percent for those unlucky enough to land in it, according to new Medicare figures provided in response to a request from The Associated Press.

The average beneficiary who falls into the coverage gap would have spent $1,504 this year on prescriptions. But thanks to discounts and other provisions in President Barack Obama's health care overhaul law, that cost fell to $901, according to Medicare's Office of the Actuary, which handles economic estimates.

"More effort will go into pushing this boulder up this Sisyphean hill in the next three months than in any court case in history," predicted Tom Goldstein, co-founder of the legal affairs SCOTUSblog and a lawyer for AARP in defense of the law. "However many op-eds or TV ads or whatever you want to place, you're just lighting money on fire when it comes to trying to change any Justice's opinions on these questions." ...

Still, the pressure for any group with a stake in healthcare to get involved could prove irresistible after the high court agreed this month to take up the case right in the middle of the 2012 election campaign. The real target, experts say, is the court of public opinion.

Washington Post: Americans still don’t know what’s in the health reform law. They may not care either. By Sarah Kliff. Excerpts: More than 18 months after passing health reform, Democrats are struggling to educate the country on what’s actually in it. A new Kaiser Family Foundation poll out this morning finds most Americans think it includes a government-run health plan (it doesn’t), that it won’t eliminate co-pays for preventive care (it will) and that, for many, the actual content of the law may not even matter: Americans don’t like health reform because they don’t like Washington. ...

Why don’t Americans know what’s in the law? One common explanation has to do with most of the law not being implemented. But the above chart shoots a bit of a hole in that explanation: Many of the least known parts of the law have been implemented. That includes no co-pays for preventive care, the gradual closing of the donut hole and new abilities to appeal health plan decisions. Some of those came online just six months after the Affordable Care Act passed last March, and have been in effect for over a year now.

The Small Business Authority: How Health-Care Reform Can Help Small Businesses. During World War II, the U.S. government put wage controls on businesses so workers on the home front wouldn’t earn more than their military counterparts on tightly controlled salaries. But with so much of the workforce overseas, the competition for talent became fierce. So companies beefed up their compensation packages with benefits like health insurance, which weren’t subject to wage controls. And the rest, as they say, is history.

There are many who argue that we should do away with the practice of employers providing health care. In 2009, Princeton economics professor Uwe E. Reinhardt wrote in The New York Times that the practice poses two problems.1 First, the perception that fringe benefits are “given” to the employee are false. The cost of providing company benefits is subtracted from employees’ salaries, which ultimately disconnects workers from the impact of health care on their families’ finances. Second, employer-provided coverage is temporary and doesn’t follow employees after they leave the company.

According to a report from the White House Council of Economic Advisers, small businesses “pay up to 18 percent more per worker than large firms for the same health insurance policy.” This, in what is effectively is a tax on small companies, discourages these firms from offering health coverage and recruiting the best talent.

The Affordable Care Act seeks to help small businesses in six ways, according to the White House...

Kaiser Health News: Study: Employers Could Dump Sickest Employees On Public Health Care. By Elizabeth Stawicki. Excerpts: A loophole in the federal health care overhaul could allow employers to game the system by getting their sicker employees to opt into buying coverage on the health insurance exchanges, according to two University of Minnesota law professors.

They say the loophole could have dire consequences for the financial health of the exchanges, which are a key part of President Barack Obama's health care law. The online marketplaces are intended to make it easier to comparison shop for health plans and also to expand access to coverage for the uninsured. ...

Monahan and her colleague Dan Schwarcz, an expert on insurance regulation, tried to anticipate how companies would respond to the law given the harsh economic environment and soaring health insurance costs. They discovered the law gives many large employers an opportunity to squeeze the most expensive workers out of their health plans. The loophole applies to companies that self-insure; that is, design and cover the cost of their own plans. Those companies account for six in ten workers who get insurance through work. ...

Monahan doubts that many large companies would stop insuring their employees entirely because they'd face a penalty under the health care law. But self-insured employers "can exclude things and essentially structure their plans to be attractive to low-risk, healthy employees and not attractive to people who are going to have significant health needs," Monahan said. She said self-insured employers could design coverage that would discourage sicker workers from remaining on the company plan and make it more attractive for them to seek coverage through the public insurance exchange.

News and Opinion Concerning the "War on the Middle Class"

"It is a restatement of laissez-faire-let things take their natural course
without government interference. If people manage to become prosperous, good. If they starve, or have no
place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility
of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better
hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the
rich. The pretense of the laissez-faire people is that only the
poor are dependent on government, while the rich take care of themselves.
This argument manages to ignore all of modern history, which
shows a consistent record of laissez-faire for the poor, but enormous
government intervention for the rich." From Economic
Justice: The American Class System, from the book Declarations
of Independence by
Howard Zinn.

Mitt Romney's proposal, which suggests fewer changes, would benefit middle- and lower-income families more than his rivals' would. ...

The findings stem from an analysis of the candidates' plans conducted by The Tax Institute, based on scenarios affecting four families at multiple income levels suggested by Bloomberg News. It examined the tax plans of President Barack Obama and four Republican candidates with the most detailed tax proposals: Mr. Cain, Mr. Huntsman, Mr. Perry and Mr. Romney.

Unlike the proposals of his potential Republican rivals, Mr. Obama's plan would raise taxes for the wealthy family in the study and would prevent tax increases for the other three households. ...

The extent of the Republican candidates' tax cuts for the wealthy family depends on how they would adjust the top income tax rate and especially on how they would tax investment income. “Whatever you do to dividends and capital gains, they benefit or get hurt in spades,” said Roberton Williams, a senior fellow at the Tax Policy Center, a nonpartisan research group in Washington. “The ones that exempt investment income all benefit the rich enormously.”

New York Times editorial: The Poor, the Near Poor and You. Excerpts: What is it like to be poor? Thankfully, most Americans do not know, at least not firsthand. And times are tough for the middle class. But everyone needs to recognize a chilling reality: One in three Americans — 100 million people — is either poor or perilously close to it.

The Times’s Jason DeParle, Robert Gebeloff and Sabrina Tavernise reported recently on Census data showing that 49.1 million Americans are below the poverty line — in general, $24,343 for a family of four. An additional 51 million are in the next category, which they termed “near poor” — with incomes less than 50 percent above the poverty line.

As for all of that inspirational, up-by-their-bootstrap talk you hear on the Republican campaign trail, over half of the near poor in the new tally actually fell into that group from higher income levels as their resources were sapped by medical expenses, taxes, work-related costs and other unavoidable outlays. ...

Conservative politicians and analysts are spouting their usual denial. Gov. Rick Perry and Representative Michele Bachmann have called for taxing the poor and near poor more heavily, on the false grounds that they have been getting a free ride. In fact, low-income workers do pay up, if not in federal income taxes, then in payroll taxes and state and local taxes. ...

The poor do without and the near poor, at best, live from paycheck to paycheck. Most Americans don’t know what that is like, but unless the nation reverses direction, more are going to find out.

Huffington Post: Citigroup Settlement Tossed: Judge Tells SEC To Get It Together. By Loren Berlin. Excerpts: In a potentially precedent setting ruling on Monday, a federal judge in New York tossed out a settlement between the Securities and Exchange Commission and Citigroup, effectively telling the SEC -- which is responsible for protecting investors and maintaining fair, orderly markets -- that it isn't going far enough in holding financial institutions accountable for their wrongdoings.

The SEC accused Citigroup of selling investors mortgage-backed bonds that the bank knew would lose value. Citi netted roughly $160 million in profits from the sale of these bonds while investors lost more than $700 million. Under the proposed settlement with the SEC, the bank would have had to pay $285 million in penalties and fees, but would not have had to admit to any wrongdoing, according to the court decision.

The lack of admission was the main reason Jed S. Rakoff, a Clinton-appointed U.S. district judge, said he decided to throw out the settlement. An admission of guilt or innocence is a matter of significant public interest, he said. "The court, and the public, need some knowledge of what the underlying facts are," wrote Rakoff. "For otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is prevented from ever knowing the truth in a matter of obvious importance." ...

The SEC often settles with large financial institutions without requiring an admission of guilt. And it's extremely rare for a judge to throw out a settlement -- though Judge Rakoff did once previously, in 2009, when he ruled that Bank of America and Merrill Lynch had "effectively lied to their shareholders" when the two firms paid out $3.6 billion in executive bonuses shortly before the bank acquired Merrill and after the bank had accepted billions of dollars in federal bailout funds.

"The way the SEC has always proceeded is a slap on the wrist and a cost of doing business, and all these big banks know it," the securities lawyer said. "If they get in trouble with the SEC, they know they can buy their way out of it without admitting anything. Ninety-nine out of 100 judges go along with it because it is the machine that greases the wheels."

Huffington Post: Restore the Basic Bargain. By Robert Reich. Excerpts: For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling. That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages. ...

The basic bargain is over -- not only at Ford but all over the American economy. New data from the Commerce Department shows employee pay is now down to the smallest share of the economy since the government began collecting wage and salary data in 1929.

Meanwhile, corporate profits now constitute the largest share of the economy since 1929.

1929, by the way, was the year of the Great Crash that ushered in the Great Depression. In the years leading up to the Great Crash, most employers forgot Henry Ford's example. The wages of most American workers remained stagnant. The gains of economic growth went mainly into corporate profits and into the pockets of the very rich. American families maintained their standard of living by going deeper into debt. In 1929 the debt bubble popped. ...

Sound familiar? It should. The same thing happened in the years leading up to the crash of 2008.

The latest data on corporate profits and wages show we haven't learned the essential lesson of the two big economic crashes of the last 75 years: When the economy becomes too lopsided -- disproportionately benefiting corporate owners and top executives rather than average workers -- it tips over. In other words, we're in trouble because the basic bargain has been broken. ...

Corporations don't need more money. They have so much money right now they don't even know what to do with all of it. They're even buying back their own shares of stock. This is a bonanza for CEOs whose pay is tied to stock prices and it increases the wealth of other shareholders. But it doesn't create a single new job and it doesn't raise the wages of a single employee. ...

American businesses, including small-business owners, have no incentive to create new jobs because consumers (whose spending accounts for about 70 percent of the American economy) aren't spending enough. Consumers' after-tax incomes dropped in the second and third quarters of the year, the first back-to-back drops since 2009.

New York Times op-ed: Things to Tax. By Paul Krugman. Excerpts: The supercommittee was a superdud — and we should be glad. Nonetheless, at some point we’ll have to rein in budget deficits. And when we do, here’s a thought: How about making increased revenue an important part of the deal? ...

Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions.

About those high incomes: In my last column I suggested that the very rich, who have had huge income gains over the last 30 years, should pay more in taxes. I got many responses from readers, with a common theme being that this was silly, that even confiscatory taxes on the wealthy couldn’t possibly raise enough money to matter.

Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal. But that was another country.

The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money, and it wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals. ...

It’s instructive to compare that estimate with the savings from the kinds of proposals that are actually circulating in Washington these days. Consider, for example, proposals to raise the age of Medicare eligibility to 67, dealing a major blow to millions of Americans. How much money would that save?

Well, none from the point of view of the nation as a whole, since we would be pushing seniors out of Medicare and into private insurance, which has substantially higher costs. True, it would reduce federal spending — but not by much. The budget office estimates that outlays would fall by only $125 billion over the next decade, as the age increase phased in. And even when fully phased in, this partial dismantling of Medicare would reduce the deficit only about a third as much as could be achieved with higher taxes on the very rich. ...

And then there’s the idea of taxing financial transactions, which have exploded in recent decades. The economic value of all this trading is dubious at best. In fact, there’s considerable evidence suggesting that too much trading is going on. Still, nobody is proposing a punitive tax. On the table, instead, are proposals like the one recently made by Senator Tom Harkin and Representative Peter DeFazio for a tiny fee on financial transactions. ...

But wouldn’t such a tax hurt economic growth? As I said, the evidence suggests not — if anything, it suggests that to the extent that taxing financial transactions reduces the volume of wheeling and dealing, that would be a good thing. ...

And it’s instructive, too, to note that some economies already have financial transactions taxes — and that among those who do are Hong Kong and Singapore. If some conservative starts claiming that such taxes are an unwarranted government intrusion, you might want to ask him why such taxes are imposed by the two countries that score highest on the Heritage Foundation’s Index of Economic Freedom.

New York Times: A Family’s Billions, Artfully Sheltered. By David Kocieniewski. Excerpts: Yet for Mr. Lauder, an heir to the Estée Lauder fortune whose net worth is estimated at more than $3.1 billion, the evening went beyond social and cultural significance. As is often the case with his activities, just beneath the surface was a shrewd use of the United States tax code. By donating his art to his private foundation, Mr. Lauder has qualified for deductions worth tens of millions of dollars in federal income taxes over the years, savings that help defray the hundreds of millions he has spent creating one of New York City’s cultural gems.

The charitable deductions generated by Mr. Lauder — whose donations have aided causes as varied as hospitals and efforts to rebuild Jewish identity in Eastern Europe — are just one facet of a sophisticated tax strategy used to preserve a fortune that Forbes magazine says makes him the world’s 362nd wealthiest person. From offshore havens to a tax-sheltering stock deal so audacious that Congress later enacted a law forbidding the tactic, Mr. Lauder has for decades aggressively taken advantage of tax breaks that are useful only for the most affluent. ...

An examination of public documents involving Mr. Lauder’s companies, investments and charities offers a glimpse of the wide array of legal options for the world’s wealthiest citizens to avoid taxes both at home and abroad.

His vast holdings — which include hundreds of millions in stock, one of the world’s largest private collections of medieval armor, homes in Washington, D.C., and on Park Avenue as well as oceanfront mansions in Palm Beach and the Hamptons — are organized in a labyrinth of trusts, limited liability corporations and holding companies, some of which his lawyers acknowledge are intended for tax purposes. The cable television network he built in Central Europe, CME Enterprises, maintains an official headquarters in the tax haven of Bermuda, where it does not operate any stations.

And earlier this year, Mr. Lauder used his stake in the family business, Estée Lauder Companies, to create a tax shelter to avoid as much as $10 million in federal income tax for years. In June, regulatory filings show, Mr. Lauder entered into a sophisticated contract to sell $72 million of stock to an investment bank in 2014 at a price of about 75 percent of its current value in exchange for cash now. The transaction, known as a variable prepaid forward, minimizes potential losses for shareholders and gives them access to cash. But because the I.R.S. does not classify this as a sale, it allows investors like Mr. Lauder to defer paying taxes for years. ...

In theory, Mr. Lauder is scheduled to pay taxes on the $72 million when the shares are actually delivered in 2014. But tax experts say wealthy taxpayers can use other accounting techniques to further defer their payment. ...

The tax burden on the nation’s superelite has steadily declined in recent decades, according to a sliver of data released annually by the I.R.S. The effective federal income tax rate for the 400 wealthiest taxpayers, representing the top 0.000258 percent, fell from about 30 percent in 1995 to 18 percent in 2008, the most recent data available. ...

“There’s real truth to the idea that the tax code for the 1 percent is different from the tax code for the 99 percent,” said Victor Fleischer, a law professor at the University of Colorado. “Any taxpayer lucky enough to have appreciated property is usually put to a choice: cash out and pay some tax, or hold the property and risk the vagaries of the market. Only the truly rich can use derivatives to get the best of both worlds — lots of cash and very little risk.” ...

“This welfare for the well-off — costing billions of dollars a year — is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and i.o.u.’s to be paid off by future generations,” said Senator Coburn, a Republican, who has called for limits on tax breaks for high earners.

Huffington Post: The Federal Reserve: Helping the Rich Get Richer. By Monika Mitchell. Excerpts: As the Occupy Wall Street movement continues to throw light on the economic hardship of the 99%, the United States Federal Reserve continues to do its part to widen the economic gap between Wall Street and Main Street. The new plan is to purchase $545 billion worth (that's a b) of mortgage-backed securities from the biggest banks in the universe -- the ones who created the toxic debt in the first place. And that is on top of the $2.3 trillion (that's a t) already vacuumed up by the Federal Reserve's defaulting debt sucking machine.

So here we go again -- one more time. The Federal Reserve is giving away our billions to those who deserve it least: the institutional debt a.k.a. commercial banking bond holders that crashed and burned the banking system and continue to be the biggest beneficiaries of government aid. Fed Chair Ben Bernanke, otherwise known as Uncle Ben, has authorized another unstimulating stimulus on top of the other unstimulating stimulus programs since the fall of 2008.

Bloomberg reports that the Fed "will start another program next quarter, [serving] 16 of the 21 primary dealers of U.S. government securities that trade with the central bank." So who are these primary dealers? Let's see... Merrill Lynch (now part of BofA), Goldman Sachs, Morgan Stanley, Citigroup, Credit Suisse, Nomura, Jeffries (highly exposed to MF Global), HSBC, BNP Paribas, Deutsche Bank, Barclays, JPM, UBS (a mess), RBS (didn't they go bankrupt?)! Yup -- the Fed is giving away another half trillion dollars worth of the fruits of the 99%'s labor to the same folks who did them in. ...

The rest of us have quaint little customs to follow -- like fiscal responsibility. We have to pay our bills with our own money, often at rape and pillage interest rates or suffer severe consequences. If you are a big bank with bad credit no problem -- you can dip your hands into taxpayer coffers with abandon at little or no cost. And even better, with no shame or embarrassment to your good name -- because no one will even know about it! But if you are one of the 99% and struggling to make ends meet, overburdened with bills and debt, you follow different rules: the Ordinary American Public rules.

It doesn't matter if you lost your job, closed your business, had your income slashed, watched your home lose value, or are mired under mortgage or credit card debt, you are stuck. No one is going to lend you a hand. Ironically, least of all the lender or creditor who has one rule for you -- pay or suffer -- and another for themselves. This is what the government and politicians call "moral hazard." It creates a moral "hazard" if the Fed relieves American consumer or homeowner debt. But it is sound fiscal policy if the Fed absorbs big bank debts and liquidates them with middle class money. The same people who find themselves in court facing judgments and foreclosure by too-big-to-fail lenders are bankrolling their legal teams. To the majority of Americans this is beyond moral hazard: it's downright depraved.

But Wall Street’s goal is to make money, not create jobs. Wall Street institutions view wages and worker benefits as costs to be minimized. Wall Street executives know that the most certain way to boost the share price of their company, and thereby pump up the value of their personal stock options, is to announce that thousands of people are to be laid off, their jobs eliminated or moved abroad.

Between 2000 and 2009, for example, U.S. transnational corporations, which employ roughly 20 percent of all U.S. workers, slashed their U.S. employment by 2.9 million even as they increased their overseas workforce by 2.4 million. The result was a significant loss of jobs nationally, as well as a net loss globally. ...

A series of Kauffman Foundation studies find that nearly all job growth in the United States comes from entrepreneurial startups, which by their nature are products of Main Street. It is equally significant that more than 90 percent of the entrepreneurs responsible for job growth come from middle-class or the top end of lower-class backgrounds. Less than 1 percent of America’s job-creating entrepreneurs come from extremely rich or extremely poor backgrounds. ...

This is a critical insight. To unleash America’s job-creating entrepreneurial energies, we must advance policies that expand the middle class and build strong Main Street economies. We have seen this demonstrated by our own national experience. ...

Beginning in the 1970s, Wall Street interests quietly mobilized to free themselves from regulation, unions, and taxes and to dismantle the nation’s economic and social safety nets. Their initiatives, which gained traction under the Reagan administration, reduced taxes on the rich, undermined unions, pushed down wages and benefits, eliminated and outsourced jobs, eliminated limits on usury and speculation, and redirected financial markets from long-term investment in real wealth creation to profiting from securities fraud, usury, market manipulation, corporate asset stripping, and the inflation of financial bubbles.

Bloomberg: Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress. By Bob Ivry, Bradley Keoun and Phil Kuntz. Excerpts: The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. ...

“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.” ...

The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma -- investors and counterparties would shun firms that used the central bank as lender of last resort -- and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion. The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year. ...

The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view. The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak. ...

Lawmakers knew none of this.

They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.

The Silver Bear Cafe: Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts. Excerpts: The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out. Ben Bernanke(pictured to the right), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious - the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is "only" $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is "only" $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world. ...

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Senator Bernie Sanders (I-Vt.): The Fed Audit. Excerpts: The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said. ...

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

The Smirking Chimp: The Greatest Hoax in the History of Money: The Fed, The Banks, and All Those Lies. By Robert Eskow. Excerpts: It took the journalists at Bloomberg News two years - and presumably lots of legal fees - to pry information out of the Federal Reserve that should have been made public long ago. We now know that the Fed's secret $7.7 trillion lending program wasn't just the most massive bank bailout ever seen, and it wasn't just free money for mega-bankers - though it was certainly both of those things. It was also the greatest hoax in stock market history.

No, scratch that. It was the greatest hoax in the history of money. And it was built on lies. How many? Let us count the ways.

Here's the first one: The banks paid back all the money back that they were given. No, they didn't. They paid back the principal on these loans. But by obtaining loans at rates far below market value, we now know they received the equivalent of $13 billion in cash giveaways.

Here's another lie: Fed economists support a free-market economy.

en Bernanke is a conservative economist who claims to support a free-market system. But we now know that the Federal Reserve lent astonishing sums to US banks in secret, and Bernanke fought with all the resources at his disposal to ensure that this information didn't become public. He didn't just want it to be held back to avoid a panic during the crisis. He wanted it kept secret forever.

The Smirking Chimp: $7.7 Trillion to Wall Street - Anything to Keep the Banksters Happy! By Thom Hartmann. Excerpts: Do you know who Elizabeth Duke is? How about Donald Kohn or Kevin Warsh? No? Well - you should. Because while Congress was debating back in 2008 whether or not to bailout banksters with a $700 billion blank check - these guys and girls were just doing it. They were funneling $7.7 trillion to Wall Street under the table - without one constituent phone call - without worrying about one election - without having to give one explanation.

They were able to do that because they're members of the Federal Reserve Board of Governors - a group of people who are not voted into office, but have the power to completely dictate monetary policy in America. They are not politicians - they're technocrats - they're bankers and financial experts. Technocrats aren't interested in democracy - it takes too long, and often the interests of the majority of voters don't quite line up with the interests of the minority of bankers and foreign investors. Or - to put it in today's terms - the interests of the 99 percent rarely line up with the interests of the 1 percent. That's why - back in 2008 - the technocrats at the Fed weren't interested in waiting for Congress - with all of its open debate and constituent services - to bail out the banks - they just went ahead and did it themselves. According to documents obtained by Bloomberg News - in 2009 - the Fed dished out $7.7 trillion in no-strings-attached, super-low interest loans to Wall Street's biggest players.

That's $7.7 trillion!

That's more than half of the total value of EVERYTHING - every single thing produced in America - that same year. $7.7 TRILLION out the door - with no one bothering to inform the electorate about it until now. And since they were super-low interest loans - banks made enormous profits off of them. Six of the nation's biggest banks - like Morgan Stanley and Bank of America - pocketed a not-too-shabby $13 billion in undisclosed profits, thanks to the deal with the technocrats at the Fed. So today - thanks to a decision made by technocrats, and not politicians - the too-big-to-fail banks are even bigger, and Wall Street has raked in more profits in just the last 30 months then they did in the entire eight years leading up to the 2008 financial crisis.

The Center for Public Integrity: K Street, Wall Street line up behind Sen. Scott Brown in his race against Elizabeth Warren. By Peter H. Stone. Excerpts: Sen. Scott Brown’s campaign and his political action committee are hustling for millions of dollars from K Street lobbyists and Wall Street interests to keep the Massachusetts seat of iconic Democrat Edward M. Kennedy in Republican hands. Whether the freshman senator can win re-election in the predominantly Democratic state could be a critical factor in GOP efforts to wrest control of the Senate. ...

Financial service lobbyists and other K Street advocates have for weeks been working hard to help the freshman senator win his high-stakes battle for re-election against Elizabeth Warren, a liberal Harvard law professor. Warren is anathema for many finance-sector lobbyists and Wall Street leaders who abhor the newly created Consumer Financial Protection Bureau— a centerpiece of the financial services overhaul—of which Warren was the intellectual architect. ...

Other advertising firepower on Brown’s behalf is expected to come from the U.S. Chamber of Commerce. The business behemoth will be engaged early and heavily in Massachusetts with ads as the Chamber did, to the tune of about $1 million, when Brown won his special election in early 2010.

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They will stimulate one another by their vigor and example.
They will set a fast pace for themselves.
Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will
share in its sucess, they will contribute in a major way.
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—Thomas J. Watson, Jr., from A
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